KBRA Affirms Ratings for TPG Operating Group II, L.P.

KBRA affirms the issuer and senior unsecured debt ratings of AA- for TPG Operating Group II, L.P. (TOG II), a subsidiary of TPG Inc. (NASDAQ: TPG; "the firm"). In addition, KBRA affirms the subordinated debt rating of A+ for TOG II. The Outlook for the ratings is Stable.

The ratings are supported by TPG’s advantageous market position, with growing scale and diversification further enhanced by the 2023 acquisition of Angelo Gordon, which added a sizable credit platform to the firm’s traditionally private equity focused AUM and extended its real estate capabilities. TPG’s strong performance track record and extensive fundraising capabilities, including during more challenging market dynamics, have produced considerable growth in AUM, revenue, and EBITDA since inception. Revenues and EBITDA benefit from a high level of base management fees, particularly compared with traditional asset managers, as well as a strong track record of performance fee generation from multiple funds and investments. Management fees (based on committed/invested capital) are viewed as stable and predictable. In addition, the firm has a significant cache of fee-earning AUM (FAUM) subject to step-up ($11.8 billion at YE25) and AUM that has yet to collect fees ($28.7 billion at YE25). Meanwhile, AUM and fee levels are not susceptible to redemption risk as funds are predominantly closed-end with long life spans. While the realization environment remains somewhat constrained, it is showing signs of gradual improvement. TPG’s future ability to generate performance fees is considered robust given the large stock of unrealized performance fees and management’s ability to create value and generate returns above hurdle rates. A flexible cost base also augments cash flow resiliency in stressed conditions. In February 2024, TOG II issued $600 million senior notes and $400 million subordinated notes. The firm subsequently completed two additional senior note issuances of $500 million each in August 2025 and February 2026. Proceeds have been used to repay outstanding debt and for general corporate purposes. Gross recourse debt/EBITDA was 1.3x at YE25, which is within rating category assumptions; leverage is expected to remain prudently managed. Additionally, interest coverage is expected to remain sufficient over the medium term. Should escalating trade tensions or broader geopolitical risks evolve into a protracted economic slowdown, asset managers will face potential headwinds, including delays in portfolio company exits, valuation pressures at the fund level, and a more difficult fundraising landscape. TPG’s globally scaled operations help to diversify from exposure to any one region. With a highly diversified platform and substantial dry powder of $72.4 billion at YE25, in our view, TPG is well positioned to capitalize on structural tailwinds and near-term market dislocations.

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